Casino Business Practices
Casinos like Caesars (formerly known as Harrah’s) now make 90 percent of its gambling profits from the financial losses of 10 percent of its visitors, according to former Wall Street Journal reporter Christina Binkley’s book, “Winner Takes All.’’ That makes nine out of ten casino visitors – the casual player- irrelevant to their business model. Their profit center is that 10% which is made up of people who are addicted and heavily in debt.
Casino operators attempt to elude charges of exploitation by pleading it is a “voluntary” act, hiding under the cloak of “freedom.” But by definition, someone who is an addict or someone who is in deep financial debt is not free.
Some of the predatory marketing practices used to incite out-of-control gambling include: aggressively targeting people who use casino ATMs because they demonstrated a weakness to chase their losses; using “hosts” who are in constant contact with heavy gamblers away from the casino to lure them right back; enlisting “Luck Ambassadors”- casino employees who hand out small cash vouchers to gamblers who have been identified by the player tracking system as losing big money in an attempt to uplift their spirits and keep them in front of the gambling machine, all of which happens in real time on the casino floor; providing gamblers free alcohol, free meals and free lodging; and using mail, phone and email solicitations to offer free slot machine play in a continuing effort to find more people to add to the 10% to replace those who have been “played to extinction” – the phrase used by casino operators to describe those whose bank and credit card accounts have been depleted.
To learn more about the most predatory business practices in the country, read the posts below. You can also check out our Blog section titled Predatory Practices and our Research Center categories titled Predatory Partners.
Casinos Hide Behind Public Relations Campaigns to Deflect Attention from the Addicts They Create and Exploit
Predatory gambling interests attempt to promote the perception they are concerned about the addicts they create and exploit for profit but the reality is they don’t have a business without them. Casinos commonly use tactics like those in the story below which describes the Seminole Tribe’s payment to “fight compulsive gambling.” Florida state government itself stands to collect an average of $240 million a year over five years from the casino, most of which will be coming from addicted citizens. How much did the casino tribe donate to help its victims? $1.75 million. Yet another reason why the most predatory business in the country is so profitable.
Casinos in Their Own Words About Other Casinos
This Oregonian article describes how predatory gambling interests, in an effort to stop the development of rival casino projects, highlight the truth about how casinos destroy families and raise the crime rate in the community.
Tribal Casinos Attack Measure 75 Over the Evils of Casinos
Self-Exclusion Lists Serve to Exclude Public Scrutiny of the Casino Business Model
Self-exclusion lists are another public relations ploy by predatory gambling interests to create a public impression they are care about the addicts they create and exploit. Because these out-of-control gamblers are so lucrative, it can be hard for casinos to pull themselves off of them. Mt. Airy Casino in Pennsylvania was the latest casino to get caught when it sent six targeted mailings over the course of 2 months to a gambling addict on the state’s self-exclusion list. In addition, the casino allowed other addicts on the self-exclusion list to gamble at the casino and even cash checks there on five separate occasions.
Self-Exclusion List Violations Lead to $40,000 Fine for Pennsylvania Casino
Wynn: “The Only Way to Win in a Casino is to Own One”
Casino owner Steve Wynn admits in this 2009 TV interview on The Charlie Rose Show that he has never seen a gambler step back, take his winnings and leave. Yet predatory gambling interests claim that to win and leave is ‘normal / recreational / responsible’… Steve Wynn admits on national television it never happens. What exactly then is ‘normal (read harmless?…) casino gambling’? This video is further evidence why casinos are the most predatory business in America.
Charlie Rose Interviewing Steve Wynn – Transcript
The Ugly Carpets of Vegas are Hideously Clever Social Engineering at Work
This article from Gizmodo.com discusses the interesting designs of casino carpets and how they may be designed to be purposely distracting to keep people gambling. Others believe they “are deliberately designed to obscure and camouflage gambling chips that have fallen onto the floor. The casinos sweep up a huge number of these every night. So the carpets are just another source of revenue.”
The Ugly Carpets of Vegas are Hideously Clever Social Engineering at Work
Why You Shouldn’t Gamble When You’re Tired
In this study, researchers at Duke University Medical School found that sleep-deprived individuals tended to make choices that emphasized monetary gain and were less likely to make choices that reduced financial loss. Sleep deprivation can also change the way the brain assesses economic value. Finally, the study also demonstrates that sleep deprivation increases sensitivity to positive rewards while diminishing sensitivity to negative consequences.
Sleep Deprivation Biases the Neural Mechanisms Underlying Economic Preferences
“I Have a Feeling…I Can’t Quite Pinpoint the Research”
This April 2011 article from the Philadelphia Citypaper reports on Sands Bethlehem (PA) Casino president Robert DeSalvio testifying before the Pennsylvania Legislature that sending monthly statements to gamblers about their losses will violate privacy and may encourage citizens to gamble more because it will remind them about their loss, potentially creating the urge to chase. When asked what the basis of his claim was, he responded: “I have a feeling…I can’t quite pinpoint the research.”
Casinos spend hundreds of millions of dollars every year to build the very best information databases on their gamblers, allowing them to send all kinds of predatory marketing materials – often in real time – with the specific intent of getting the gambler to chase. DeSalvio’s testimony was willfully dishonest.
Philadelphia Citypaper – Care to Revise Your Statement
Canadian Casino Offers “Slot University” Promotion
A new promotion by Casino N.B. in Moncton is offering the opportunity for people to learn how to play slot machines for free, as a way to “maximize fun.” One former slots addict noted: “You might as well take a bottle of alcohol and set it down on a table and teach people how to drink…you’re gonna get all wound up in all the action and it’s slowly going to get bigger and bigger.”
Casino Criticized for Slot University
Australia Attempting to End Electronic Gambling Machine Tricks
Australia Senator Nick Xenophon is trying to stop certain features of electronic gambling machines (or “pokies” as they are known in that country) that trick players into thinking they have won, when they really have lost. Senator Xenophon is also requesting that the industry release machine probability accounting reports.
Call to Stop Pokie Machine Tricks
Foxwoods Casino Targets “Loyal” Customers
We know from Wall Street Journal reporter Christina Binkley that casinos make 90% of their profits from 10% of their customers. So, it’s no surprise that Connecticut’s Foxwoods Casino has developed a new business strategy to entice it’s “loyal” customers to gamble more of their money away, particularly those “customers living within 90 minutes of the…property.”
By Misleading Players, Slot Machine Design Spurs Problem Gambling
This article explains how reel electronic gambling machines (EGMs) have been designed to mislead players and has directly contributed to the high rate of problem gambling: “Unbalanced reel design must be a major factor, if not the major factor, in the maintenance of problem gambling principally because the gambler unconsciously believes he or she cannot lose.” Unlike table games, EGMs offer widely different odds of winning, which the authors compare to loaded dice or rigged carnival games. “The fact that the players do not know the rules makes the reel gambling machine unique amongst gaming devices. Not only are the players ignorant of the rules but the rules vary from machine to machine and neither the gaming industry nor the regulators disclose them. As far as transparency is concerned, the standards applicable to reel gaming machines are totally out of step with all other forms of gaming.” The authors make a strong case for establishing uniform standards, banning biased, “virtually-mapped” reels on EGMs and providing more transparency regarding the player’s chances of winning. Unbalanced Reel Gambling Machines
Why It’s Time to Disrupt the “Business as Usual” Approach to the Government Policy of Predatory Gambling
This MUST-READ report by Charles Livingstone and Richard Woolley provides what may be the best analysis about how almost 100% of the responsibility for problem gambling is placed on the backs of the afflicted citizens. Predatory gambling operators and the government accept virtually no responsibility. The report also shows why it is time to disrupt this “business as usual” approach promoted by those who profit from the failed government policy of predatory gambling.
Risky Business: A Few Provocations on the Regulation of Gaming Machines
The Tobacco and Predatory Gambling Industries Partner Up (in Secret) to Make Huge Profits
In August 2011, the Reno News and Review publishing the article below detailing how two local Chambers of Commerce in Nevada served as front groups for an influential study that was secretly paid for by the tobacco industry. Since its publication in 1996, the study has been cited repeatedly by the predatory gambling industry in its argument to oppose smoking bans in casinos. It partnered with the tobacco industry to ensure that both would continue to make huge profits of the misfortunes of their customers. This information came to light with the recent publication of the book Casino Women by Susan Chandler and Jill B. Jones.
Smoke and Mirrors – Big Tobacco and Big Casino Sold Nevadans a Bill of Goods
Predatory Gambling Interests Fund Their Own Science
This June 2008 piece from Salon.com delves into how the predatory gambling industry uses some of its huge profits to fund scientific studies. The industry took a lesson from the tobacco industry and decided it was not going to claim that gambling addiction did not exist. Instead, it set up its own research arm to publish favorable research. The American Gaming Association, the predatory gambling industry’s top lobbying group, created the National Center for Responsible Gaming (NCRG) in 1996 and casinos make it a point to keep it flush with money. Recently, “the NCRG announced $7.6 million in new funding commitments for the next five years, including $2 million from Harrah’s, $2 million from MGM Mirage and $1 million from International Game Technology, the largest slot machine manufacturer in the world. Its board of directors includes executives from MGM Mirage, Harrah’s and the casino company Boyd Gaming Corp., as well as Judy Patterson, executive director of the American Gaming Association.”
The NCRG’s research has a common theme: that addicts of every kind, whether they are dealing with gambling or illegal drugs, have a similar brain chemistry and the casinos are not at fault for their problem. There is little research into the addictive nature of slots and other electronic gambling machines and why people who play video machines seem to get addicted faster.
Gambling Limits Do Not Last
When riverboat gambling came to Iowa in 1991, limits were placed on the amount of money people could lose and gambling could only take place when boats were cruising along the river. By 1994, these betting ceilings had been removed, cruising requirements were relaxed, and land-based slot machine locations were legalized. Why is this important? Because it highlights that the predatory gambling industry constantly pushes past initial limits to expand its reach into citizens’ wallets.
Lessons From Casino Management
The general manager of Henderson, Nevada’s Stetson Saloon and Casino has some advice for player club members: casinos don’t really care how much you win or lose. What matters to them is how long you play the games and how much you are willing to play. They care less about sending free slot play to frequent players (why waste it on people who are coming anyway?) and concentrate more on sending promotions to less frequent players. The manager of this casino also freely admits that, “the longer you play, the more money you are likely to lose.”
Casino Perks Come 3 Ways: Game, Time, Bets
Government’s Predatory Gambling Program Surpasses the Predatory Subprime Lending Business
In 2006, prior to the massive crash of the highly-predatory subprime lending business which nearly every state Attorney General sued for their predatory practices, Harrah’s top executive Rich Mirman boasted to Wall Street Journal reporter Christina Binkley: “I worked in the subprime lending industry. At least casinos are open about what they do.”
The infamous subprime lender Countrywide Mortgage made a lot of money and employed a lot of people by selling bad loans to citizens who could never afford to pay them back. Countrywide’s “success” was phony prosperity and it caused major damage to our economy which all of us are still paying for today. Who thinks their kind of phony prosperity is the right direction for our community and our state? How can government partner with a business like casinos whose practices go beyond these failed subprime lenders?
Penn National Finds a Way to Market to Problem Gamblers
In May 2008, the Illinois Gaming Board fined Hollywood Casino, owned by Penn National, $800,000 for marketing to customers who put themselves on the state’s self-exclusion list. “As part of a campaign to develop new customers, the casino rented a list of names from a firm that operates ATM machines at Illinois casinos. In January, the casino mailed promotional materials, including coupons to use at Hollywood Casino, to nearly 15,900 people identified as prospective customers. However, the casino’s marketing department failed to check the list against the names of people enrolled in the Gaming Board’s Self-Exclusion Program. The board said 146 people in the program received the mailing.”
Penn National Fined $800K for Marketing to Banned Gamblers
Emerging Issues in the Use of “Free Play”
Non-negotiable slot credits, or what is commonly called “free play” has become the primary form of customer incentives in casinos. Today’s casinos use mail, phone and email solicitations to offer free slot machine play to lure citizens who have rarely been to a casino before, a tactic adopted from the tobacco companies who used to hand out free cigarettes in low-income neighborhoods. This article attempts to identify the emerging issues of free play and how they are impacting the frequency of play and casino profitability.
Emerging Issues with Free Play